GST Impact: dealers offering discount of Rs 30,000 on the Wagon R and Rs 1 lakh on the XUV 500

The goods and services tax (GST) is going to roll out on July 01, 2017, and customers are playing the waiting game to get a better deal, even postponing purchases. In order to attract customers, car dealers across India are offering huge discounts to push sales in June.

One can avail a cash discount of Rs 30,000 on the Maruti Suzuki Wagon R, while on the Maruti Suzuki Swift the discount has been increased to Rs 20,000 from Rs 10,000. Even on the Maruti Suzuki Celerio, the cash discount has been increased to Rs 20,000, whereas one can avail a cash discount of up to Rs 35,000 on the Maruti Suzuki Alto.

Hyundai dealers, on the other hand, have doubled the discounts on the Eon and Grand i10 although the South Korean carmaker hasn't officially announced the discount rate for the current month.

The segment that benefits from the newly announced GST structure are the large vehicles with a displacement greater than 1,500cc as well as SUVs with a length of more than 4 metres. This category of vehicles will attract 15 per cent cess over the peak rate of 28 per cent, making it a total of 43 per cent. Presently, the central excise of 27 per cent is applied along with a VAT of 12.5 to 14.4 per cent. In addition to these taxes, there are state taxes, octroi and infrastructure cess that is levied. The total tally of these taxes goes to up to 45 per cent.

In that sense, the prices of the Toyota Innova and Toyota Fortuner are likely to be reduced post GST. However, Toyota dealers aren't giving any discounts on them since both the vehicles have a solid demand in the market.

As the new GST structure has brought hybrid cars under the same slab as that of large vehicles, meaning a tax of 43 per cent post GST, Mahindra dealers are trying hard to push the Scorpio hybrid. Customers can now avail a cash discount of up to Rs 1 lakh on the Mahindra XUV 500.

The automobile market, however, is still unclear about the impact of GST on the car prices from July.